ArcelorMittal (NYSE:MT) and JSW Steel, in conjunction with private equity funds, are showing interest in purchasing the assets of ESL Steels Ltd, a part of Anil Agarwal's Vedanta (NYSE:VEDL) Ltd. The announcement, made on Wednesday, comes as Vedanta seeks to clear a $1 billion debt due in January 2024.
According to InvestingPro, JSW Steel is a prominent player in the Metals and mining industry. Its net income is expected to grow this year, and the company has maintained dividend payments for 19 consecutive years. These are among the numerous insights available on the InvestingPro platform, which offers extensive data and tips for investors.
Vedanta has estimated its assets at Rs 10,000 crore, a valuation that is anticipated to meet resistance from potential buyers. The sale is considered essential for Vedanta's debt clearance strategy.
Jayant Acharya, Joint Managing Director of JSW Steel, expressed their interest in Vedanta's iron ore mines in Karnataka and Goa. This acquisition would further strengthen JSW Steel's position in the market, which has seen impressive gross profit margins according to InvestingPro.
On the other hand, Arcelor Mittal could gain a strategic advantage in Eastern India by acquiring Vedanta’s steel plant in Jharkhand. The company had previously extended its reach by acquiring the Essar Steel plant in Gujarat.
In addition to these assets, Vedanta has contemplated selling its copper plant located in Tamil Nadu. The company has committed to securing all necessary environmental clearances for this sale. The Supreme Court's forthcoming decision on the copper plant will be pivotal for its sale.
This development follows Vedanta's recent announcement of plans to establish six separate listed entities as part of its business strategy. This strategic move is seen as an effort to streamline operations and improve overall efficiency. Indeed, InvestingPro data reveals that JSW Steel's revenue growth has been slowing down recently, and this acquisition could potentially bolster that growth.
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